In today's real estate lending market, where interest rates have gone up and the cost of borrowing is expensive, which has directly impacted and raised the stress test (B20) further to qualify for a lesser mortgage amount.
People are still wondering how the Variable rate has impacted their monthly payments and how is it now compared to the fixed rate
Below are a few pointers for you on Variable and Fixed rates, for a 5-year term
- Variable rate is more expensive than Fixed-rate, it is almost 1.20% higher than the Fixed rate
- Variable rate payment is approximately $652 per $100,000, whereas the Fixed rate is approximately $586
- Variable rate penalty is 3 months interest only and Fixed rate penalties are much higher if you break the term and want to refinance
- Variable rate can be switched to Fixed anytime, but no vise-versa from Fixed to Variable within the term
- Variable rate has 5 years term only, as of today, whereas Fixed can have up to 10 years term (starting from 6 months, 1, 2, 3, 4, 5, 7, and 10 years). The lower the term, the higher the interest rate on a Fixed Mortgage
So now, the question is, do you want to keep it Variable and wait for interest rates to come down? Or, you would still do a shorter term on a Fixed rate?
My Mortgage Toolbox App will give you a very good understanding of how math works. It is absolutely Safe and Easy to navigate. Click here or on the image below
Call me for more information and the right advice which will firm your decision with more options.
Your Mortgage Guy